This Is How We Ended up With Over $600,000 of Student Loan Debt

Hey everyone! As the site has grown, I've come across more and more stories that are similar to this one. While obviously, student loans are tough for everyone that has them, I think people with professional degrees are overlooked because we just assume that their high salaries help them overcome all financial obstacles quickly.

But in reality, that's not the case. That's why I wanted to share Amber and Danny's story today. They run the personal finance blog Red Two Green and are working on over $600,000 of student loans. Enjoy! ~M$M

When we started dating in 2007, we were both exactly $0 in debt. Over the last decade, that beautiful $0 ballooned into a colossal $649,000. The question that we get asked all too often– how did this happen?

How we ended up with $600,000+ in debt

After getting married, we graduated with our bachelor’s degrees in 2010 fairly unscathed. Danny had NO student loan debt, and I graduated with a measly $3,500 that I had to borrow my last semester. While measly, it was still a negative number. I had never had debt before. It made me uncomfortable.

Our plan was always to go to law school (me) and dental school (Danny) and we knew that student loan debt would assuredly accompany our higher education. What we didn’t know was just how much debt we would walk away with.

What we did

Danny went to graduate school to amp up his application for dental school. In total, that Master’s of Biomedical Science degree cost us about $60,000. We justified that if that degree could get him into dental school, it would be worth the cost.

I was lucky to attend a very affordable law school, where the cost of tuition was low. I earned my J.D. in 2015 with about $44,000 in student loan debt. I ended up applying to law school one year earlier than we anticipated.

Our original plan was for me to start one year after Danny started so that we could graduate together. This would allow me to work full time for a year to save up a little for school. At the last minute, we decided it would be better if I started school as soon as I could.

I would become a lawyer one year faster, meaning I would be earning a lawyer’s salary one year earlier. It seemed like I would earn more money as a lawyer than as a “sociologist.” (Also, hey p.s. there just aren’t that many sociology related jobs for undergrads.)

But making this last minute decision meant that I had already missed deadlines for scholarships. That did not come without a cost and should have been factored into my decision of whether to wait one year or apply immediately to law school.

And then there was dental school. Oh, my lucky stars there was dental school.

I think we were just so grateful that Danny got into dental school that we didn’t take the time we should have to choose the right school for us.

Danny’s school cost about $84,000 a year. At 6-7.9% interest, that added up FAST and left us with more than $600,000 in combined student loan debt by the time Danny graduated in June 2016.

During school

We lived frugally. We used coupons. We didn’t buy fancy things. I was able to work during some of my summers and part-time as a research assistant which helped us to have something to live off of besides our loans.

We did not think too much about our student loans. It never occurred to us that we could (and should) start making payments while we were still in school. We had heard of income-based repayment plans and were familiar with a few different strategies to paying off the debt, but we never stopped to consider what we were going to do.

I think we assumed that things would magically work out for us.

We did not use a budget while we were in school. We rationalized that it was too difficult to calculate what our budget should be when we weren’t even earning significant income. Our thought process was to spend as little as we could.

But student life is a trap for eating out too often and drinking too much soda. We fell into those traps.

Then I graduated law school, and everything changed.

I took a job as a judicial law clerk when I graduated. It was an AMAZING experience, but let’s just say it was not a huge money maker. I had student loan payments that were then coming out of their “grace period.”

We had a new son to worry about. No one that I talked to (faculty/professional development/financial people at my law school, other law students, other dental students) seemed to have solid advice for managing student loans.

Most people I talked to were convinced that finding the way to lower your monthly payments as much as possible was the way to go.

I didn’t know much about money, but I knew that lower payments meant it would take longer to pay off, which meant more interest was accruing, which meant school was costing more in the long run (this is true even if your loans are going to be forgiven using any of the IBR plans).

I got stressed out. Me being stressed out lead to a furious journey, seeking the best solution for how we were going to handle our loans. I wanted to know every single thing there was to know about money and student loans, and how to get out of debt as quickly as possible.

I read every personal finance book I could get my hands on.

P.S. – Some of my favorites for starting out:

Total Money Makeover

7 Years to 7 Figures

The Millionaire Next Door

Rich Dad Poor Dad.

If there is a book, blog or a forum dealing with finances, student loan debt, investing, and or becoming a millionaire, I have likely read it.

What we would have done differently in school

There are a few things we definitely would have done differently:

Hunted for scholarships before and during school

Had a more solid application for dental school so we could have chosen to attend a cheaper dental school

Done something to create passive income while in school (we could have purchased a duplex and rent out one side)

Side hustled during school (we could have started our blog sooner, sold things on e-bay, sold plasma, anything to make a few extra bucks)

Here's what we are doing now to get ahead

We now have a budget and a financial plan in place. Our goal is to have no student loan debt by the end of 2021 (5 years after graduation). We live off of about $3,000 per month and the rest of our combined income and income from side hustles (like our physical and financial a fitness program) gets dumped into student loans.

We paid off my law school ($48,000 after interest) in less than 18 months and so far, we are on track for paying off Danny’s dental school by 2021!

About Millennial Money Man

Bobby Hoyt is a former band director who paid off $40,000 of student loan debt in 18 months on his teaching salary and then left his job to run Millennial Money Man full-time. He helps other Millennials earn more through side hustles, save more through budgeting tools and apps, and pay off debt. He is a personal finance expert who has been seen on Forbes, Reuters, MarketWatch, CNBC, International Business Times, Business Insider, US News, Yahoo Finance, and many other personal finance and entrepreneurship media outlets.

Comments

Really awesome to see you two out there and crushing it with the debt. Most people would just give up and let that $600k of student loans sit around for 25+ years. One of my best friends graduated from dental school with $400k plus of student loans, and his current plan is to pay them off in 25 years – he’ll be 55 years old by then… I have another friend that went to dental school with $500k of student loans – she has no plans to handle them and is just going to pay them off in 30 years too.

My wife and I are similar to you – she’s a dentist, I’m a lawyer. She’s still doing her residency, which is unpaid and actually costs $20k per year (we’ve been cash flowing her residency though). But this May, we’ll be in full clean up mode for her as we try to crush her debt. It wasn’t 600k, but still six-figures of it, but we’re hoping that, if our income is what we project it to be, that we’ll get rid of it in a year or 2.

Thankfully, my own law school student loans are already gone now. Proud to say I managed to pay them off before we got married!

Congratulations! Not on the $600k student loan but by graduating from the Colege of Law and Dentistry. Looks like your plan of paying off your loans are working very well with you guys. The year 2021 is really just around the corner. Patience, patience, and more patience is the key. With both of you, now have professional jobs. You’re on your way to very successful careers and family life. Wish you both the best.

I can’t get my head aound that much debt. I picked chemical engineering because you could make doctor/lawyer wages with just a four year degree if you were talented enough. But you guys seem to have a handle on it now and when you do finally trash that last loan if you can keep living frugally for just a few years you’ll be multimillionaires. No doubt you’ll make it, but I don’t see how this system we are now in is self sustaining. What about those people that flunk out of dentist and law schools with hundreds of thou of debt? I just don’t see how they could ever pay it. That is the real nightmare scenario, racking up that much debt and not getting the credentials needed to make big money.

Lauren

Have you considered having your husband work for a public service dental profession such as at the Department of Veterans Affairs? They have programs to help pay off the debt and if you serve 10 years in a public service profession, and make on time payments through a qualified loan program, the debt is eliminated after 10 years. It is very important to make sure your loans are in the right program to qualify for forgiveness.

Hi Lauren! We blog a little about that exact issue. I think that works well for a lot of people! For us, we’d just rather get rid of the debt ASAP (hopefully well under 10 years) but I agree– its a good option! (at least while it still exists!)

Wow, I don’t know what to say here but to admire you guys for a) having the guts to take on so much debt and b) being steadfast in paying it off within next 3 years! While b) is what I also would’ve done I will never have the guts for a)!

It makes me so relieved knowing that I graduated with PhD engineering with full tuition waiver and $1000 monthly research stipend and so, actually saved money in graduate school! So, it was so much easier when I started work so my savings could go into investments from the first month of working.

Your story is inspirational for many and also a cautionary tale for people who rack up massive student debt thinking it will all pan out. Even if it does, the opportunity cost is huge.

It’s crazy that I hear about these six-figure student loan debts. Why does school have to be SO expensive? But congrats on having a plan, being frugal, and knocking out your debt sooner than later! I’m student loan debt free as of late last year, and I can’t begin to describe how amazing it feels. I’ll be rooting for you!

Thanks Chonce! It is always encouraging to hear from people who have paid their’s off! It is SO crazy how expensive higher education is becoming. It will be interesting to see what happens in the next 10-20 years!

Tobez

This isn’t your fault, but you say “Danny’s school cost about $84,000 a year” likely because it was described to you that way, and there are two important parts of that phrase: 1. “Per Year” — The yearly cost of school really isn’t relevant, because you’ll be paying for multiple years of the program. However, this yearly cost is significantly less daunting than the cost of your 4 year, or longer, program. If this program was 4 years, it could be described as a $336,000 program, which is much more eye opening. 2. “School” — What is “school” in this context. Does it refer to Tuition only? Or does it also cover Fees, Housing, Food, Books, etc. that are also significant costs for students. Depending on which one a school is referring to, the expected cost is usually higher, even if a student finds a job to offset the cost (I won’t take the opportunity to argue about how working 40 hours a week for 52 weeks at $7.50 an hour minimum wage nets $15,600 before taxes — a number that really can’t cover many programs).

My school was described as $22,000 per year for tuition with room and board. This number excluded books I would have to pay for and any additional food I would have to purchase once that paltry meal plan ran dry. I was lucky enough to have all but 1 year paid for (I took the proverbial victory lap), and I graduated with only $28,000 4 years ago.

Sarah

This gives me hope! I’m an RN and my husband is a second year dental student. I just knocked out my student loans a few weeks ago but his debt seems so daunting (undergrad, MBA, and now dental school). Thanks for being so inspiring! Will definitely be following up on your blog!

Lo

I’m a current dental student about to graduate next year! After dental school and some loans from undergrad, I’ll be close to $400k of student loans. Thankfully my boyfriend (future husband) and I plan to move into together and he does not have student loans. My question to you is did you guys refinance your loans? Any suggestions would help! Thank you so much 🙂

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